Girdharilal Sugonmal Daulani, Ahmedabad V. The ITO, Ward-7(2)(2), Ahmedabad

ITA 1708/AHD/2019

AI Insights

The case revolves around an appeal by Girdharilal Sugonmal Daulani against the order of the CIT(A)-7, Ahmedabad, which confirmed the addition of Rs.6,27,582 as unexplained investment for the Assessment Year 2016-17. The Assessing Officer had initially made this addition under Section 69 of the Income Tax Act, 1961, following a scrutiny of the assessee's investments in shares through India Advantage Securities Pvt. Ltd. The assessee contended that these investments were funded through personal savings and family contributions, and that he had incurred losses in these investments, which were not considered by the lower authorities. The Tribunal, after reviewing the submissions and evidence, including the assessee's income tax returns and financial statements, concluded that the additions made were not justified.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129282 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-12-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 13-11-2019
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 69; 142(1); 143(2)

Judgement Text

ITA No.1708/Ahd/2019 A.Y. 2016-17 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1708/Ahd/2019 Assessment Year: 2016-17 Girdharilal Sugonmal Daulani, vs. Income Tax Officer, D2/205, Asutosh Flat, Ward – 7(2)(2), Ahmedabad. B/h. Sardarnagar, Ahmedabad – 382 475. [PAN – AJGPD 7152 H] (Appellant) (Respondent) Assessee by : Shri Mitesh Agrawal, AR Respondent by : Shri M. Anand Kumar, Sr. DR Date of hearing : 21.12.2022 Date of pronouncement : 31.01.2023 O R D E R This appeal is filed by the Assessee against the order dated 29.08.2019 passed by the CIT(A)-7, Ahmedabad for the Assessment Year 2016-17. 2. The grounds of appeal raised by the assessee are as under :- “1. The CIT (A) erred in confirming addition of Rs.6,27,582 as unexplained investment u/s 69 of IT Act 1961 on the ground that confirmation from relative and loss incurred with India Advantage Securities P Ltd is not provided ignoring the facts that the appellant earning income from its business and regularly filing I.T. Returns and confirmation of relative and ledger of India Advantage Securities P Ltd confirming loss in share market was provided to Hon'ble CIT(A). 2. He failed to appreciate and ought to have held that; a. That the appellant has filed the return of Income of Rs.2,73,650/- for AY 2016-17 and had accumulated capital bare loss incurred while share trading. b. That the appellant has incurred the loss and there is no unexplained investment u/s 69 of I T Act 1961 as there is a ITA No.1708/Ahd/2019 A.Y. 2016-17 Page 2 of 4 trading loss which is confirmed as per the profit and loss statement of India Advantage Securities Pvt. Ltd. c. That the sources of funds were from own capital and savings and from relatives. d. That the nature of money is fungible and the money is also received back from India Advantage Securities Pvt. Ltd. on sale of securities which again is reinvested to make losses incurred in trading. 3. The Appellant prays that the AO be directed to delete the entire addition made amounting to Rs.6,27,582. 4. Without prejudice, the Appellant prays that the AO be directed to substantially reduce the addition made considering the saving, own capital and confirmation from relatives and losses incurred in trading in securities and in fact there is no investment.” 3. The assessee is a individual and filed return of income on 05.04.2017 declaring total income of Rs.2,73,650/-. The assessee offered his income under the head ‘Profit & Gain of business and profession’. The case was selected for limited scrutiny and the issue identified for examination was ‘Securities Transactions’. Statutory notice under Section 143(2) of the Income Tax Act, 1961 was issued on 18.08.2018, but no response from the assessee was received. Thereafter, notice under Section 142(1) dated 05.11.2018 was served which was responded by the assessee by uploading covering letter of ITR copy, computation of income, Demat account, Bank Pass Book. The Assessing Officer issued show cause notice on 13.12.2018 for proposed addition of Rs.6,27,582/- in respect of unexplained investment as per provisions of Section 69 of the Act. The Assessing Officer observed that on verification of the ledger of the assessee in the books of M/s. India Advantage Securities Pvt. Ltd., it was found that the assessee invested Rs.6,27,582/- in share through M/s. India Advantage Securities Pvt. Ltd. The assessee submitted that the source of investment is from his personal savings and money taken from family members. However, no confirmation and evidences were furnished to support his submissions. Thus, the Assessing Officer made addition of Rs.6,27,582/- as unexplained investment under Section 69 of the Act. ITA No.1708/Ahd/2019 A.Y. 2016-17 Page 3 of 4 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the assessee is in the business of running a retail trading garment business under the name ‘Komal Creation’. The Ld. AR submitted that the addition made by the Assessing Officer only by considering investment entries debited from bank account without giving due consideration to the return of income which was filed by the assessee in previous years. The Ld. AR submitted that the assessee has good amount of savings from his business which was totally ignored by the Assessing Officer. The Ld. AR submitted that money was invested in stock market through India Advantage Securities Pvt. Ltd. which he got refund from sale of invoices. The Ld. AR submitted that the assessee incurred huge loss out of this investment in the current A.Y. 6. The Ld. DR submitted that the net loss was never disclosed at the time of assessment before the Assessing Officer as well as before the CIT(A). The Ld. DR further submitted that in consonance with investments transferred, savings and the fund were not explained by the assessee at any point of time. The Ld. DR relied upon the Assessment Order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee is deriving pension as he is having savings through his trading business. This fact was never taken into account by the Assessing Officer as well as by the CIT(A). The observations of the Assessing Officer that the confirmations were not filed or no new evidence has been filed seems to be incorrect as the assessee has given the details pertaining to nature of business, whereabouts and nature of share transaction, copy of income tax return along with copy of Profit & Loss account, Balance Sheet, audited report, opening stock statement demat statement, bank statement as well as assessee’s father’s confirmation related to the amount of Rs.3,11,000/- along with bank statement of evidence, source of investment as loan obtained from LIC against LIC policy of the assessee. The assessee has also submitted actual holding value of Rs.1,38,900/- but pointed out the same as per the statement of India Advantage Securities Pvt. Ltd. as on 31.03.2010. The assessee has incurred loss during the year which has been reflected in the ITA No.1708/Ahd/2019 A.Y. 2016-17 Page 4 of 4 statements. All these details were not taken into account by the Assessing Officer as well as by the CIT(A). Therefore, the addition made by the Assessing Officer does not sustain. Appeal of the assessee is, therefore, allowed. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 31 st day of January, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 31 st day of January, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad